Upselling vs Cross-selling: what are the differences?

Definition: Upselling is a sales technique aimed at encouraging the customer to opt for a higher-end or value-added product compared to their initial choice. Upselling is sometimes translated as "moving up a tier".

Here are 5 examples to illustrate this technique:

• Ready-to-wear: you intend to buy trousers A, the seller suggests trousers B, of better quality.

• Mobile telephony: you want to buy smartphone A, the seller encourages you to buy smartphone B, which is newer and contains more features.

• Airlines: you select a basic fare for your next flight, the airline suggests a fare that includes advantageous services.

• Restaurants: you order dish A, the waiter suggests dish B, tastier.

• Hotels: you book a room, the hotelier offers an alternative room, with a better view, more spacious, better equipped.

Here's the example of Air France, which, when choosing your ticket, offers its different fares with a grid of included services or not:

Definition: Cross-selling is a sales technique that involves offering complementary products or services to the main item the customer is considering purchasing. Cross-selling is sometimes translated as additional sale or cross-sale.

Let's give some examples from different sectors:

• Electronics: when purchasing your new laptop online, the site offers you a carrying case, a wireless mouse, and antivirus software to complete your purchase.

• Cosmetics and beauty: you are about to buy a moisturiser, and you are offered a facial cleanser to complement it.

• Travel: you buy a train ticket on SNCF Connect. The site offers you a car rental service.

We could multiply examples indefinitely. And for good reason, cross-selling and upselling strategies have become widespread and are used in all sectors, regardless of the business model (retail, e-commerce, subscription, etc.).

It's not coincidental that cross-selling and upselling are sometimes confused. The two approaches share common points.

In both cases, the main objective is to increase the average basket value, and therefore the company's revenue. Only the method differs:

• In the case of cross-selling, the customer is encouraged to add other products (complementary products).

• In the case of upselling, the customer is encouraged to choose an upgraded version of the product or service they are considering buying.

Cross-selling and upselling, when intelligently implemented, also aim to improve the shopping experience.

Offering complementary or higher quality items ultimately leads to increased customer satisfaction (and, ultimately, customer loyalty):

• Cross-selling allows the customer to purchase in one go what they would have bought in multiple transactions.

• Upselling enables the customer to buy a product or service that better meets their expectations and needs.

Cross-selling and upselling enable you to anticipate or even exceed your customers' expectations.

The key to successful cross-selling and upselling strategies lies in the relevance of the recommendations. Cross-selling or upselling cannot be done without:

• A good knowledge of the product catalog, the complementarities between products, logical associations, range relationships between products... It's difficult to industrialise and automate a cross-selling and/or upselling strategy without solid Product Information Management.

• A good understanding of your customers, their expectations, needs, preferences. This requires good customer data management.

The last common point between cross-selling and upselling: both generally rely on the implementation of recommendation engines that automate the suggestions based on available data: product data and customer data.

Although often confused due to their similarities, upselling and cross-selling are distinct sales techniques. Let's review the main differences between cross-selling and upselling.

Objectives

Both cross-selling and upselling aim to increase the average basket size, but in different ways:

• Cross-selling aims to increase the volume of items added to the basket and purchased. For example, instead of buying just a computer, the customer buys the computer + a case + antivirus software.

• Upselling aims to increase the value of the products purchased. Instead of buying a computer for 600 euros, the customer ends up buying a computer for 900 euros that has more options.

The timing of cross-selling and upselling is not always the same.

The timing of upselling:

• Upselling on physical products mostly takes place before the finalisation of the order, whether before or after adding to the basket.

• Upselling on services can occur before or after the finalisation of the order. For example, a customer of a software who has subscribed to the Light subscription can later be offered the Pro subscription.

The timing of cross-selling:

For cross-selling, there's no difference between physical products and services. A customer can be offered complementary items during the purchase act, before paying for their basket, or later, in post-purchase. Example: you bought a bike, and a month later, you receive an email inviting you to buy maintenance products.

Therefore, cross-selling and upselling incentives can be made:

• During the purchase act, whether on the website or in-store.

• After the purchase act, generally using marketing channels (email, SMS, etc.) and marketing automation.

Note: Cross-selling and upselling operations carried out post-purchase do not impact the average basket size but the revenue. This leads us to the next point.

Upselling increases the margin on individual sales. A company typically makes more margin on a 2,000 euro computer than on a 1,000 euro computer.

Cross-selling primarily impacts revenue.

Upselling allows selling more expensive products, while cross-selling enables selling more products.

Upselling and cross-selling are two proven sales techniques. They are omnipresent on the internet but are also used in physical commerce.

In this article, we have explored the differences between cross-selling and upselling, as well as their similarities. Let's add here that it's entirely possible to combine upselling and cross-selling. They are not exclusive strategies to each other; on the contrary.

Let's reiterate, the performance of a cross-selling or upselling strategy relies on a solid knowledge of your products and your customers... thus, on good data management and the use of suitable technologies. Marketing, now more than ever, depends on your ability to collect and exploit the data available. This is precisely why our marketing platform Actito natively integrates a Customer Data Platform. There's no advanced marketing without centralised, unified, and properly prepared data.

Interested in discovering our platform and how it can help you implement cross-selling and upselling strategies? Do not hesitate to contact us for a first discussion.